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MAXCAP FIRST MORTGAGE CONSTRUCTION FUND ASSIGNED 'VERY STRONG' INVESTMENT RATING BY AUSTRALIA RATINGS

Melbourne, 11 November 2019 – MaxCap First Mortgage Construction Fund – rated VERY STRONG.

Australia Ratings Analytics (Australia Ratings) has assigned an investment rating of ‘VERY STRONG’ to the MaxCap First Mortgage Construction Fund (the Fund). A Product Complexity Indicator of ‘YELLOW’ has also been assigned to designate the view that the Fund is a COMPLEX financial product, indicating that the underlying assets require specialist investment skills to acquire and to monitor. In addition, investment in this Fund has restrictions on the ability to redeem due to the relatively illiquid nature of the underlying loans. Investors should have a good understanding of the term and characteristics of the distributions from this type of fund. This Fund is available to wholesale investors only.

A rating of VERY STRONG is the second highest rating on the investment rating scale used by Australia Ratings. A VERY STRONG investment rating indicates a very strong conviction that the Fund can deliver a risk-adjusted return in line with the Fund’s investment objective.

The MaxCap First Mortgage Construction Fund (MFMC) is managed by MaxCap Investment Management P/L, a subsidiary of MaxCap Group P/L, a Melbourne-based specialist commercial real estate (CRE) investment manager. MFMC invests in Australian and New Zealand CRE construction loans, targeting relatively short-term, medium-sized loans of AUD30m to AUD50m. All loans are senior, first mortgage loans with a maximum Loan to (completed) Value of 65%. While this sector has typically been the domain of the major banks, regulatory pressure has meant that experienced non-bank participants are now seeing excellent deal flows and strong risk adjusted returns.

Since its inception, the Fund has focused on investing in a diverse mix of CRE loans, with the portfolio currently tracking at a net internal rate of return of 11.85% as at 30 September 2019.

Australia Ratings’ analyst, Maggie Callinan, says “the rating reflects the experience and track record of MaxCap Investment Management and their expertise in managing CRE lending”. She added, “the rating also indicates the high level of confidence Australia Ratings has that the Fund will continue to deliver a strong risk-adjusted return”.

The research report is available from www.australiaratings.com.

FOR MORE INFORMATION, CONTACT:

Maggie Callinan, Director
maggie.callinan@australiaratings.com 03 8080 6684

ABOUT AUSTRALIA RATINGS

Australia Ratings is a local, independent rating agency that provides research and ratings on debt securities, investment products, and Operational Capability Assessments. As an ASIC-licensed rating agency, we provide general advice to the broader investment community through our detailed reports. We are Australia’s only agency that holds a retail Australian Financial Services Licence (AFSL). This enables both retail and wholesale investors to use our credit ratings to help them gauge credit risk and complexity of financial products sold in the Australian market.

About Australia Ratings’ Investment Rating

Our investment rating reflects Australia Ratings’ current opinion of a fund’s or an investment’s ability to achieve its stated investment objectives in the near term.The rating expresses a view on the expected consistency of the fund’s or investment’s performance within its peer or style group and on the fund manager’s ability to produce superior performance amongst its peers in the near term with due regard to the medium-term consensus view of the asset class to which the product is benchmarked.

A five-point scale is used to differentiate our opinion on how well we believe a fund will perform against a range of risks. Click here to find out more.


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